IT spending set for big boost in Asia Pacific

Tech November 29, 2016 15:49

By The Nation

International Data Corporation (IDC), a market research company, has forecast manufacturing IT spending in Asia Pacific (excluding Japan) to reach US$36 billion by 2020. 

According to its new IT Spending Guide 2016-20 , IDC forecasts that technology spending in the manufacturing sector in the Asia/Pacific excluding Japan (APeJ) region will reach over $36 billion by 2020, a compounded annual growth rate (CAGR) of 5.34 per cent from 2016 to 2020.

Sampath Kumar Venkataswamy, research manager, IDC Manufacturing Insights, said that high levels of industrial automation and the push for increased operational efficiencies has resulted in technology investments that aid in mitigating productivity-related challenges.

“Systems integration and consolidation remains one of the top investment areas for most manufacturing organisations that are on the path of implementing smart manufacturing platforms. The push to increase visibility on the shop floor and across the value chain will continue to drive the corresponding technology investment efforts in applications such as CRM [customer relationship management], SCM [supply chain management] and predictive analytics,” added Venkataswamy.

APeJ IT spending in manufacturing is dominated by the high-tech equipment sector, followed by the chemicals and the automotive industries. From a technology perspective, the spending on IT services is expected to reach over $14 billion by 2020 while software-related spending is expected to grow 6.91 per cent CAGR for the same period and reach over $12 billion. Software spending includes engineering applications, operations management and supply chain management software. However, IDC expects lower growth for hardware- related spending and is expected to reach only $9.4 billion by 2020.

“The China manufacturing industry IT spending market will grow at a steady pace. This is driven by the initiative of digital transformation of manufacturing enterprises, which requires the manufacturers to shift more emphasis on IT applications. The increasing adoption of 3rd Platform technologies [cloud, Big Data, social, and mobility] is unlocking the potential of traditional IT applications. The deployment of innovation accelerators [IoT, 3D printing, and robotics], coupled with the integration with operations technologies will drive a revolution across manufacturing operations, as companies seek to gain the advantages of Industry 4.0 and Made in China 2025,” says Yves Wang, senior research manager, IDC Manufacturing Insights, China.

Manufacturing-related initiatives, specifically in China, India and the Asean countries, will lead to increase in technology spending to as much as $29 billion by 2020, accounting for or nearly 80 per cent of the APeJ IT spending.0

The Asia/Pacific (excluding Japan) IT Spending Guide 2016-2020 measures investments on systems integration, IT outsourcing, application development/deployment, ERM, networking equipment and security at Asia Pacific level across 14 countries and 13 key industries.